Its supporters consider the minimum wage a reasonable floor for workers who, whatever their age or skill set, show up on time, are professional in their appearance and demeanor and perform responsibly. While those qualities are laudable, some jobs simply are not worth the current federal minimum wage ($7.25 an hour), let alone the $10.10 hourly target now pushed by Democrats generally and President Obama in particular.
An inviolable economic truth prevails: When the required wage is higher than the value of the job, the floor becomes a locked door between the young and unskilled seeking a foothold on the employment ladder. So say 500 economists, including three Nobel laureates, who weighed in this spring.
This predictable downside is already available for inspection. A study by the American Action Forum released in March reported this result: States with minimum wages above the federal minimum in 2013 experienced higher unemployment among the most vulnerable.
As noted by The Daily Caller, “Overall ... just a $1 increase in the minimum wage was 'associated with a 1.48 percentage point increase in the unemployment rate,' and a '0.18 percentage point decrease in the net job growth rate.' ” Teens ages 16 to 19 were especially hard-hit, suffering job-shrinkage of 0.5 percent, trailing states with the federal minimum wage by 2.3 points.
The Congressional Budget Office also predicted a substantial impact if minimum-wage boosters get their way, pegging likely job losses as high as 1 million. For those cut from the market, $0.00 will be their new minimum wage.
Does it matter that we're talking about a rather small number of people? It should.
According to the Bureau of Labor Statistics, about 3.6 million workers earn at or slightly below minimum wage; that's 2.5 percent of all workers and 1.5 percent of potential workers. Nearly one-third are teens, and 55 percent are 25 and younger. That leaves about 1.1 percent of Americans above 25 — the family-rearing population of heart-rending reports — making minimum wage. Moreover, they're usually the second or third bread-winner in the household.
For this tiny subset, we're going to unleash the disrupting might of the U.S. government? Well, maybe, because hiking the minimum wage polls well across the board (which just goes to show how many of us never have had to meet a payroll). Unions, especially, like the idea because many enjoy contracts with accelerators tied to the minimum wage.
In short, to believe the folderol about hiking the minimum wage having only salutary effects on the economy, you also have to believe the owners of small businesses and family-run franchises are hoarding bags of cash that only Uncle Sam can force them to part with.
But if we're agreed that reliable full-time employees shouldn't live in poverty, there's a better way: Raise the federal Earned Income Tax Credit and make it payable monthly, not just once a year during tax season. That way people supporting families in low-wage jobs will see their incomes rise, but teens seeking their first jobs will be less likely to have their inexperience held against them.
Paradoxically, everybody wins.